Correlation Between Take Two and SohuCom
Can any of the company-specific risk be diversified away by investing in both Take Two and SohuCom at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Take Two and SohuCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Take Two Interactive Software and SohuCom, you can compare the effects of market volatilities on Take Two and SohuCom and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Take Two with a short position of SohuCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and SohuCom.
Diversification Opportunities for Take Two and SohuCom
Pay attention - limited upside
The 3 months correlation between Take and SohuCom is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and SohuCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SohuCom and Take Two is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Take Two Interactive Software are associated (or correlated) with SohuCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SohuCom has no effect on the direction of Take Two i.e., Take Two and SohuCom go up and down completely randomly.
Pair Corralation between Take Two and SohuCom
Given the investment horizon of 90 days Take Two Interactive Software is expected to generate 0.61 times more return on investment than SohuCom. However, Take Two Interactive Software is 1.63 times less risky than SohuCom. It trades about 0.17 of its potential returns per unit of risk. SohuCom is currently generating about -0.14 per unit of risk. If you would invest 16,038 in Take Two Interactive Software on August 24, 2024 and sell it today you would earn a total of 2,620 from holding Take Two Interactive Software or generate 16.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Take Two Interactive Software vs. SohuCom
Performance |
| Timeline |
| Take Two Interactive |
| SohuCom |
Take Two and SohuCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and SohuCom
The main advantage of trading using opposite Take Two and SohuCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, SohuCom can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SohuCom will offset losses from the drop in SohuCom's long position.| Take Two vs. Nintendo Co ADR | Take Two vs. NetEase | Take Two vs. Playtika Holding Corp | Take Two vs. Electronic Arts |
| SohuCom vs. Snail, Class A | SohuCom vs. Playstudios | SohuCom vs. Playtika Holding Corp | SohuCom vs. Doubledown Interactive Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.
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